Content Provision on UGC Platforms

Consumers visiting platforms that host user-generated content (UGC) not only consume content but also generate content by investing time and effort. This paper seeks to examine a UGC platform’s content provision strategy: how a UGC platform can motivate consumers to generate UGC and how it can manage the balance between UGC and the platform’s own content. As UGC and the platform’s own content perform the same function, one may be inclined to think that the two types of content are substitutes. Our analysis shows that they could function as strategic complements. This is because increasing the platform’s own content provision raises the quality of content on the platform, motivates more consumers to join the platform, and increases the total UGC provision on the platform. The public good characteristics of UGC could prompt us to think that UGC provision on the platform will be less than the socially optimal level. Our analysis identifies conditions when the total provision of UGC can be more than the social optimum. One may wonder whether it is profitable for a UGC platform to completely dispense with its own content. We find that it is always profitable for the UGC platform to offer some of its own content. This is because when consumers spend more time consuming the content, the platform can monetize their attention and earn higher ad revenue. Additionally, we find that an increase in ad space on the platform may motivate greater provision of UGC. Finally, we extend the model in several different directions and find that our results are robust.